Live Ventures rporated(LIVE) - 2021 Q3 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements The company reported significant growth in revenue and net income for the nine months ended June 30, 2021 Key Financial Metrics | Financial Metric | Nine Months Ended June 30, 2021 | Nine Months Ended June 30, 2020 | | :--- | :--- | :--- | | Revenues | $202,439 thousand | $130,904 thousand | | Gross Profit | $73,825 thousand | $51,115 thousand | | Operating Income | $26,648 thousand | $12,545 thousand | | Net Income Attributable to Live Stockholders | $24,085 thousand | $6,451 thousand | | Diluted EPS | $7.31 | $1.87 | Condensed Consolidated Balance Sheets | Balance Sheet Item | June 30, 2021 (Unaudited) | September 30, 2020 | | :--- | :--- | :--- | | Total Current Assets | $92,882 thousand | $95,928 thousand | | Total Assets | $198,708 thousand | $197,259 thousand | | Total Current Liabilities | $56,346 thousand | $57,362 thousand | | Total Liabilities | $131,127 thousand | $153,587 thousand | | Total Stockholders' Equity | $67,581 thousand | $43,672 thousand | Condensed Consolidated Statements of Cash Flows | Cash Flow Activity | Nine Months Ended June 30, 2021 | Nine Months Ended June 30, 2020 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $32,199 thousand | $18,075 thousand | | Net Cash used in Investing Activities | ($14,470) thousand | ($2,992) thousand | | Net Cash used in Financing Activities | ($16,148) thousand | ($12,075) thousand | | Increase in Cash | $1,581 thousand | $3,008 thousand | Notes to the Condensed Consolidated Financial Statements (Unaudited) The notes detail the company's operating segments, a pending acquisition, debt reduction, and ongoing SEC litigation - The company operates through three segments: Retail (Vintage Stock and ApplianceSmart), Flooring Manufacturing (Marquis), and Steel Manufacturing (Precision Marshall)[20][107] - On June 14, 2021, the company agreed to acquire 100% of SW Financial, a registered broker-dealer, for approximately $7.0 million, pending regulatory approval[37][44] - The SEC filed a civil complaint in August 2021 regarding financial reporting violations from 2016-2018, which the company denies[89] - The ApplianceSmart subsidiary continues to operate under Chapter 11 bankruptcy protection[94] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes strong performance to growth across all segments, boosted by operational gains and one-time events Results of Operations Revenues grew 55% and net income surged, driven by broad segment growth and a $6.15 million PPP loan forgiveness gain Overall Performance Comparison | Performance Metric | Nine Months Ended June 30, 2021 | Nine Months Ended June 30, 2020 | | :--- | :--- | :--- | | Revenues | $202,439 thousand | $130,904 thousand | | Gross Profit | $73,825 thousand | $51,115 thousand | | Operating Income | $26,648 thousand | $12,545 thousand | | Net Income | $23,907 thousand | $6,451 thousand | - A gain of $6.15 million was recorded from the forgiveness of PPP loans during the nine months ended June 30, 2021[154] - A gain of $1.765 million was recorded from the discharge of certain payables in bankruptcy proceedings[155] Results of Operations by Segment All segments reported strong operating income growth, with Retail up 145% and Flooring Manufacturing up 51% Segment Operating Income | Segment | Operating Income (9M 2021) | Operating Income (9M 2020) | % Change | | :--- | :--- | :--- | :--- | | Retail | $13,424 thousand | $5,481 thousand | +145% | | Flooring Manufacturing | $14,158 thousand | $9,381 thousand | +51% | | Steel Manufacturing | $3,814 thousand | $0 | N/A | | Corporate & Other | ($4,748) thousand | ($2,317) thousand | -105% | Liquidity and Capital Resources The company maintains strong liquidity with $10.6 million in cash and $37.7 million available under credit facilities - As of June 30, 2021, the company had $10.6 million in cash and an additional $37.7 million available under its revolving credit facilities[168] - Net cash provided by operations was $32.2 million for the nine months ended June 30, 2021, compared to $18.1 million for the same period in 2020[171] - Working capital was $36.8 million as of June 30, 2021, a slight decrease from $38.6 million as of September 30, 2020[170] Quantitative and Qualitative Disclosures about Market Risk The company reports no material exposure to market risks such as foreign currency or commodity price fluctuations - The company believes it is not subject in any material way to market risks, including foreign currency exchange risk or commodity price risk[184] Controls and Procedures Management concluded that disclosure controls and procedures were not effective due to material weaknesses in internal control - Management concluded that disclosure controls and procedures were not effective as of the end of the period covered by the report[185] - Material weaknesses identified include a lack of written documentation of internal control policies and procedures and a failure to establish rigorous evaluation procedures[191] PART II - OTHER INFORMATION Legal Proceedings The company faces a civil complaint from the SEC and a shareholder class-action lawsuit, both of which it intends to defend - The SEC filed a civil complaint on August 2, 2021, against the company and two executives alleging financial and reporting violations between 2016 and 2018[197] - A shareholder class-action lawsuit was filed on August 13, 2021, alleging the company made materially false and misleading statements[198] Risk Factors A new risk factor has been added concerning the potential adverse impact of the SEC complaint and shareholder lawsuit - A new risk factor highlights that the SEC complaint and shareholder lawsuit could divert management's focus, result in substantial litigation expense, and an adverse outcome could materially harm the business, reputation, and stock price[201] Unregistered Sales of Equity Securities and Use of Proceeds No shares were repurchased during the quarter, with approximately $6.8 million remaining under the buyback program - The company did not repurchase any common stock during the quarter; approximately $6.8 million remains available under the existing stock repurchase program[206] Other Information The company announced the upcoming separation of its Senior Vice President & General Counsel, Michael J. Stein - The company's Senior Vice President & General Counsel, Michael J. Stein, will separate from the company, with his employment ending on November 12, 2021[209] Exhibits This section lists all exhibits filed with the report, including corporate documents, officer certifications, and XBRL data - Lists all exhibits filed with the quarterly report, including corporate charters, bylaws, officer certifications (Sections 302 and 906), and XBRL data[212]